31 May 2001 External T.I. 2001-0080335 - TRANSFER OF PROPERTY FROM TRUST TO BENEF.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Whether disposition occurs on transfer of property from trust to beneficiaries

Position: Question of fact.

Reasons: S. 54 defines disposition to include transfer of property from trust to beneficiaries except where there is a change in legal ownership without a change in beneficial ownership.

XXXXXXXXXX 	Wayne Antle, CGA
		2001-008033
May 31, 2001

Dear XXXXXXXXXX:

Re: Transfer of Property from Trust to Beneficiaries

This is further to your letter dated April 11, 2001 in which you ask for information on how to obtain an advance income tax ruling that a disposition would not occur when property owned by a trust is transferred to the beneficiaries of the trust, and the trust is terminated.

Section 54 of the Income Tax Act (the "Act") defines disposition to include a transfer of property from a trust to its beneficiaries, except where there is a change in legal ownership without a change in beneficial ownership. The determination of whether there will be a disposition of property by the trust can only be made after reviewing all of the facts and documentation.

In general, where any property has been distributed by a personal trust to a beneficiary in satisfaction of the beneficiaries capital interest in the trust, the property will be considered to have been disposed of at its cost amount pursuant to subsection 107(2) of the Act thereby deferring, in most cases, any capital gain arising on the disposition. The income tax consequences may vary where the property has served as a principal residence for any of the trust's beneficiaries while it was owned by the trust. For detailed information in this regard, please refer to Form T1079 Designation of a Property as a Principle Residence by a Personal Trust, and Interpretation Bulletins

IT-120R5 Principal Residence and IT-437R Ownership of Property (Principal Residence) which are available on our website at www.ccra-adrc.gc.ca.

With respect to the question posed in your correspondence, our role is not to engage in tax planning. Accordingly, you may wish to seek professional tax advice with respect to the issues raised in you letter. We will only provide an advance income tax ruling for specific proposed transactions, within the guidelines set out in Information Circular IC 70-6R4 Advance Income Tax Rulings. Please refer to this circular, available on our website, if you wish to request a ruling.

We trust that our comments will be of assistance.

Yours truly

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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